Ajay Kumar, CPA

908-380-6876

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Reporting of Foreign Bank/Financial Accounts (FBAR)

Lately there have been a lot of talks, articles, emails and discussions about reporting of the foreign bank accounts; foreign assets etc. A lot of people seem to be getting notices from the federal govt, so I decided to summarize the requirement briefly for all my friends.

If you have a financial interest and/or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of financial accounts exceeding certain thresholds, the Bank Secrecy Act may requires you to report the account EVERY YEAR to the Treasury department.

Who Must File an FBAR:-United States persons (US citizens; US residents, Corporations, partnerships, LLC etc) are required to file an FBAR if:

  • The United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; and
  • The aggregate value of ALL foreign financial accounts together exceeded $10,000 at any time during the calendar year to be reported.
  • If you use the simplified method and you own your home, you cannot depreciate your home office. You can still deduct other qualified home expenses, such as mortgage interest and real estate taxes
  • You can still fully deduct business expenses that are unrelated to the home if you use the simplified method. These may include costs such as advertising, supplies and wages paid to employees.
If you use more than one home with a qualified home office in the same year, you can use the simplified method for only one in that year. However, you may use the simplified method for one and actual expenses for any others in that year.

Reporting and Filing Information: -

A person who holds a foreign financial account may have a reporting obligation even when the account produces no taxable income. The reporting obligation is met by answering questions on a tax return about foreign accounts (for example, the questions about foreign accounts on Form 1040 Schedule B) and by filing an FBAR. The FBAR is a calendar year report and is due April 15 of the year following the calendar year being reported with a 6-month extension available. FinCEN will grant filers failing to meet the FBAR due date of April 15 an automatic extensionto October 15 each year. A specific extension request is not required. The FBAR must be filed electronically through FinCEN’s BSA E-Filing System. The FBAR is not filed with a federal income tax return. The IRS can waive the penalty for failure to timely file or request an extension for any person required to file an FBAR for the first time. Those required to file an FBAR who fail to properly file a complete and correct FBAR may be subject to a civil penalty not to exceed $10,000 per violation for non-willful violations that are not due to reasonable cause. For willful violations, the penalty may be the greater of $100,000 or 50% of the balance in the account at the time of the violation, for each violation. Additional information about the FBAR can be found at: https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Report-of-Foreign-Bank-and-Financial-Accounts-FBAR.

Ajay Kumar, CPA

 5 Villa Farms Cir;
Monroe Township,
New Jersey 08831, U.S.A.

Contact us

Email: akumar@saicpaservices.com, saicpaservices@gmail.com 

Office:
732-906-5656,
732-215-9600

Cell: 908-380-6876
Fax: 908-368-8638